We use cookies to collect information about how our website is used and to improve the visitor experience. You can change your browser’s cookie settings at any time. Please review our privacy policy for more information. OK
The numbers are interesting, but what do they mean? That’s the question raging in corporate America in the wake of a mandate that kicked in this year requiring public companies to disclose median employee pay and how it compares with the CEO’s compensation.
Pay consultants see dubious value in the disclosures—in large part because firms calculate the median in different ways and have vast differences in how they’re structured. The consultants argue those variations make even comparisons between companies in the same industry of little value.
“If the intent was to cast judgment among firms that pay employees less in similar sectors, the Dodd-Frank rule has … failed on that front,” Deb Lifshey, managing director for the pay consultant Pearl Meyer, wrote on the company’s blog.
In some cases, two similar firms had wide differences in median pay, which left a false impression that one had far more generous compensation than the other. “Breaking down the analysis, however, revealed that it was not an apples-to-oranges comparison despite the similarity of companies, due to a variety of factors including where the company’s employees are located, the concentration of white collar vs. blue collar jobs, and level of outsourcing,” Lifshey wrote.